Verizon Communications Inc. agreed to buy AOL Inc. in a deal valued
at $4.4 billion that intensifies the battle for advertising on mobile
devices.
Verizon, the largest U.S. wireless provider, gets two of AOL’s technologies: its mobile streaming service, featuring live TV, original shows and pay-per-view, and its ability to automatically send targeted ads to mobile devices.
As the world embraces mobile with increasing enthusiasm, the deal gives Verizon new revenue streams at a time when its main business faces increasing competition from challengers such as T-Mobile US Inc. It also directly pits the company against two leading Web ad companies, Google Inc. and Facebook Inc.
“They want to integrate advertising and content programming with their wireless network,” Roger Entner, an analyst with Recon Analytics based in Dedham, Massachusetts, said of Verizon. “It’s an ambitious plan. The mobile advertising market is dramatically dominated by Google.”
The carrier is getting its hands on AOL just before the introduction of its own mobile video-streaming service, which could come as early as next month.
Verizon will pay $50 a share, a 17 percent premium over AOL’s stock price on Monday, and AOL Chief Executive Officer Tim Armstrong will continue to lead AOL’s operations after the deal is completed, the companies said Tuesday in a statement.
AOL’s shares jumped 18 percent to $50.25 at 10:21 a.m. in New York, slightly above Verizon’s offer price. Verizon dropped 0.56 percent to $49.52.
Verizon, the largest U.S. wireless provider, gets two of AOL’s technologies: its mobile streaming service, featuring live TV, original shows and pay-per-view, and its ability to automatically send targeted ads to mobile devices.
As the world embraces mobile with increasing enthusiasm, the deal gives Verizon new revenue streams at a time when its main business faces increasing competition from challengers such as T-Mobile US Inc. It also directly pits the company against two leading Web ad companies, Google Inc. and Facebook Inc.
“They want to integrate advertising and content programming with their wireless network,” Roger Entner, an analyst with Recon Analytics based in Dedham, Massachusetts, said of Verizon. “It’s an ambitious plan. The mobile advertising market is dramatically dominated by Google.”
The carrier is getting its hands on AOL just before the introduction of its own mobile video-streaming service, which could come as early as next month.
Verizon will pay $50 a share, a 17 percent premium over AOL’s stock price on Monday, and AOL Chief Executive Officer Tim Armstrong will continue to lead AOL’s operations after the deal is completed, the companies said Tuesday in a statement.
AOL’s shares jumped 18 percent to $50.25 at 10:21 a.m. in New York, slightly above Verizon’s offer price. Verizon dropped 0.56 percent to $49.52.
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